February 12, 2003 4:20 PM PST

Semel: Products to drive Yahoo in 2003

SUNNYVALE, Calif.--Yahoo on Wednesday unveiled the latest details of the Web portal's turnaround plans, announcing two paid products aimed at high-speed Internet customers.

As expected, the company announced a streaming video subscription service and a planned premium services package dubbed "Yahoo Plus." Yahoo said its premium package will appeal to broadband users, but declined to elaborate on specific services that will be offered. The company added that it has struck a deal to distribute Yahoo Plus on Hewlett-Packard computers.

The video service, called "Yahoo Platinum," will offer clips of news, entertainment and sports programming. In a demonstration, Yahoo co-founder Jerry Yang showed clips from Fox?s "American Idol" and said Platinum would offer outtakes, exclusive interviews and special events from third-party partners. Yahoo is in discussions with Fox, CBS and ABCNews, among others, to include their content, according to sources familiar with the plan.

Separately, Yahoo said it has struck a distribution agreement with British telecom company BT Broadband. Through Yahoo U.K. Plus, subscribers will get broadband access packaged with Yahoo Plus.

The announcements came at a meeting with Wall Street analysts at Yahoo's headquarters here, where CEO Terry Semel outlined a series of priorities for the year to further his turnaround plan for the Web portal.

Semel emphasized that his top objective is to improve the quality of Yahoo's products and services. High-quality products, he said, will be the main way to lure users to Yahoo, keep them there, introduce them to various features, and then convince them to become paid subscribers.

"Great content plus a huge distribution platform equals a powerful advantage," Semel told the audience.

Semel's message highlights how much Yahoo's fortunes have changed since the company's last analysts day in November 2001. During his first public appearance in front of Wall Street, Semel had to articulate a strategy for plugging a gaping financial hole that stemmed from the collapse of online advertising dollars. This time around, after reporting three consecutive profitable financial quarters, Yahoo's message is less dramatic and more practical.

"There?s a sense that things are under control and that there's a fair amount of growth that is relatively easy to achieve for 2003 and beyond," said Jordan Rohan, an analyst at Soundview Technology Group, who was present at the meeting.

The company has seen success in a number of initiatives that were outlined at the earlier analysts day. For one thing, Semel said, nearly half of Yahoo's revenue comes from new businesses, notably from paid search, from the company's HotJobs acquisition, and from premium services such as personal ads, enhanced e-mail and Internet access.

The tone this year seemed more intent on execution--less about new initiatives and more about how to maintain momentum.

Besides improving product quality, Semel said, the company will need to exploit its "network effect"--in other words, drive people to other parts of its collection of sites. Semel's other objectives include: growing Yahoo's international business, establishing standards in the ways businesses can advertise on the site, identifying key opportunities for growth and improving internal organization.

 

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